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EPO: divisional filings a frustration for generic drug companies

In-house counsel from generic drug companies believe pharma innovators are abusing divisional patent filings to give them extra protection

Generic drug companies find that invalidating a patent granted by the EPO can be difficult if it also has multiple divisional applications. As soon as they have one patent knocked out, the pharma innovator could have several others alive as backup.

Because of perceived abuse of the system by innovators, reforming the divisional filing process is one concern that generic pharma companies would like to see addressed by the EPO. But reforming the system is easier said than done.
A divisional application is allowed when one product comprises multiple inventions. Rather than file one umbrella application, companies can file divisional applications for each novel part of their invention at the EPO. Because innovation does not happen all at once, businesses can file an application at any point during the production of their invention.
“There are two different schools of thought on divisional filings,” says the associate general patent counsel at a generic drug company.
“One is that you have a flexible system that allows you to file a divisional at any time, which means you always keep your options open because you always have something pending.
“But if you are a competitor you might think the first patent is invalid, but just because you knock out the parent there is still the pending divisional – which they can get to grant despite your opposition,” they add.  
An industry source from a generic drug company argues this process is particularly complicated for those working with biosimilars.
“Patentees in the pharma and biologics space started abusing this divisional system. People started protesting. This technique allows the effective enforcement of the patent to be extended again and again.”
Continued uncertainty about divisional filings is a particular concern for biosimilar companies because biologics tend to be protected by more patents due to the complexity of the drugs’ composition.
“Even if biosimilar companies can invalidate the parent application, that issue can come back still and be a freedom to operate concern for them, which is why some generics say the EPO’s current policy to allow patentees to file a divisional throughout the life of the patent creates uncertainty,” says the associate general counsel.
The head of IP at a European generic drug company agrees and argues that the current system does not serve the best interests of businesses.
“A patent office has to serve the interest of the applicant and the interest of the public and it’s not good for the public to have a granting procedure that goes on forever,” he says.
The EPO has attempted to reform the divisional filing process.
“They are not blind to this problem and considered the point a few years ago,” says the associate general patent counsel. “Around 2010 the EPO decided to change the rules and said you could only file a divisional by a defined cut-off date and after that the route is closed.”
Though the reform was designed to stop abuse of the system, according to the associate general patent counsel the result was that applicants rushed to file at the same time before the law took effect, thus causing a backlog in the system.
“The EPO got snowed under with new divisional applications because if you put a cut-off, say within the first two years, that means the applicants will always file at the deadline just to keep their options open. I don’t think that is the right cure for the system,” they say.
The EPO has since reversed its policy, allowing divisionals to be filed at any time.
Getting freedom to operate is another problem caused by divisional filings. According to the associate general patent counsel, generic drug companies are never fully able to escape the prospect that one of the divisional applications for an innovative drug will be granted by the EPO.
“You can have many overlapping patents and businesses are having a hard time getting freedom to operate. One way of dealing with that issue is the Arrow declaration in recent years,” he says.

Taking aim

In 2007, the England & Wales High Court gave generic companies a tool to use against divisional filings, in Arrow Generics v Merck. By using what is now known as the Arrow declaration, parties can invoke a Gillette defence to argue that the patent should never have been granted because it was obvious at the filing date and therefore cannot fall within the scope of the claim.
These rules give generic businesses a way to invalidate parent patents. Given that generic drug companies have a route available to invalidate parent patents, a source at an innovator company does not agree that innovators are necessarily “evergreening” their products by filing divisional patents.
“You can’t evergreen. That is a term branded around when generics say pharma companies are filing additional patents to extend the product life cycle. If you file a divisional application, it expires at the same time,” says the assistant managing counsel at a pharma innovator.
“What is common strategy, and this is not just in pharma, is if you have a patent that you think can be opposed, you file the divisional before the patent is granted as a backup in case something goes wrong in the filing process.”
He argues that filing divisional applications is a very common practice seen across multiple industries and that he does not see divisional filings as an advantage for pharma innovators.
“The question is ‘does it make a difference?’ and the answer is ‘it doesn’t really.’ It is part of the open rules of the game. But it isn’t really evergreening. All technology areas have the potential to do this,” they say.
The associate general patent counsel is hesitant to claim all innovators are abusing the system to their own advantage.
“It is for others to judge if filing many divisionals is abuse. The problem is that there are valid reasons to allow that flexibility; there is a defensible way to use the system. Sometimes you do have multiple inventions and filing divisionals over time is entirely justifiable, and if you lose that ability you would lose protection.
“There needs to be a way of doing it but there is no clear solution,” they conclude.

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